In the face of broad-based USD selling, the GBP/USD added to its intraday gains and refreshed daily tops.
The dollar was weakened by Fed Chair Jerome Powell’s dovish comments and falling US bond yields.
Before placing new bets, bulls may want to wait for a sustained move beyond the 1.3900 level.
During the early North American session, intraday USD selling gathered up steam, pushing the GBP/USD pair to new daily highs, bringing it closer to the 1.3900 mark in the previous hour.
On Wednesday, the pair got some aggressive bids near 1.3800 and has already recovered its weekly losses from the previous two trading sessions. Following the release of higher-than-expected UK consumer inflation figures, the British pound found some support. The GBP/USD pair’s big intraday bullish rise was aided by this, as well as the emergence of some substantial selling surrounding the US dollar.
Following the release of Fed Chair Jerome Powell’s written remarks for delivery before the House Financial Services Committee, the already weakened USD lost even more territory. Powell predicted that inflation would remain high in the coming months but then decline. As a result, investors have lowered their expectations for the Fed to tighten monetary policy sooner than expected.
The markets now believe the Fed will delay tapering its asset purchases or raising interest rates for a longer period of time. This was bolstered by a sharp drop in US Treasury bond yields intraday. Apart from that, a shift in risk sentiment put further downward pressure on the safe-haven dollar, which did not benefit from a stronger-than-expected jump in the US Producer Price Index.
The US PPI for final demand increased to 7.3 percent on an annual basis in June from 6.6 percent in May, according to data released by the US Bureau of Labor Statistics. According to the journal, the annual Core PPI increased to 5.6 percent from 4.8 percent in May, exceeding analysts’ expectations of 5.1 percent.
It will be fascinating to see if bulls can seize the momentum or if the GBP/USD pair continues to struggle to achieve acceptance above the 1.3900 level. The major attention will be on Fed Chair Jerome Powell’s semi-annual congressional hearing, which will continue to affect USD price dynamics and provide the GBP/USD pair some push./n
